Gold Demand Across Countries

This paper analyzes the demand for jewelry, bars & coins, and gold ETFs across high-income and middle-income countries. We employ a simultaneous equations model that allows a joint determination of the various categories of gold demand and find significant differences across gold demand categories and across countries. Jewelry and bars & coins demand are positively related in middle-income countries but unrelated in high-income countries. Jewelry demand is negatively related to gold prices in middle-income countries but not in high-income countries. Bars and coins demand positively reacts to global risk (VIX) in high-income countries but not in middle-income countries. The findings indicate that not all gold is equal and serves different purposes in different countries. Gold is generally more integrated with financial markets in high-income countries than in middle-income countries and jewelry is the least integrated among the three categories of gold demand.